THE major high street banks have so far paid out more than £550 million in refunds to customers who complained about unauthorised overdraft charges, it emerged yesterday.

The pay-outs, which total £559 million, were revealed in the annual results of the majority of the banks that are involved in the English High Court test case over the issue of whether the charges are fair.

But the actual total will be higher as both Abbey and the Nationwide Building Society declined to disclose how much they had refunded.

The HBOS group has faced the biggest pay-out to customers who complained the charges were unfair, refunding a total of £122 million.

Royal Bank of Scotland Group, which includes NatWest, has paid out some £119 million to date, while Barclays has paid out £116 million and HSBC has refunded a total of £115 million.

Lloyds TSB had refunded £76 million to customers before the test case began and Clydesdale and Yorkshire Bank said claims and costs, as well as provisions for future administrative costs relating to the issue, totalled £11 million.

The big five are reckoned by the British Bankers' Association to hold about 70 per cent of the UK's current accounts.

The banks are currently awaiting the judgment from the test case which could pave the way for a ruling on how much they can charge people who go into unauthorised overdraft or breach their agreed limit.

The case was bought jointly by the seven banks and Nationwide and the Office of Fair Trading to settle the issue after customers began to reclaim millions of pounds through the courts.

The recent case concerns whether unauthorised overdraft charges come under the scope of the 1999 Unfair Terms in Consumer Contracts Regulations. If the judge rules that this is the case, the court will decide at a separate hearing later this year whether the charges are unfair, and give guidance on what a fair fee should be.

The banks, who argued that consumer contract rules do not apply to the charges and that, even if they do, the fees are not unfair, have been given permission to put any new or ongoing refund claims on hold until the outcome of the test case is known.

HSBC said yesterday that in the worst-case scenario total refunds could reach £303 million if it loses the court case.

The other banks involved declined to predict the total liability they would face if they lost the case, but if, like HSBC, total pay-outs would be more than double what they have refunded so far, banks could collectively face a bill of more than £1.1 billion from the issue.

Banks are thought to make between £2 billion and £3.5 billion a year in fees charged when customers go into unauthorised overdraft.

These fees can be as high as £39, but campaigners claim that the actual cost to banks is as little as £2.50.

Commercial lawyers have warned that, if the charges are scrapped or drastically reduced, it will mean an end to free banking and all customers will have to pay a monthly current account fee.

PILING UP THE CREDIT CARDS

NEARLY one in eight Britons has at least four credit cards.

About 3 per cent have five cards and 4 per cent have more than five, according to research for MoneyExpert.com.

But just over half of people have only one or two credit cards, and 22 per cent do not have any.

The survey also showed that 28 per cent of the population have applied for a new card in the past year.